The J&K State Consumer Disputes Redressal Commission, Srinagar, comprising President (O) Smt. Nighat Sultana and Member Sh. Maheep Gupta, held United India Insurance Company Ltd. liable for short payment of an insurance claim after finding that the surveyor had wrongly applied under-insurance deductions to the Furniture, Fixtures & Fittings (FFF) and the Testing Machine. Holding that under-insurance deductions cannot be applied where the loss is a total loss, the Commission directed the insurer to compensate the complainant for the short payment, delay in settlement, mental agony and litigation.

Facts:

The complainant, M/s Lala Enterprises and Hemkunt Sale & Services, alleged that it had suffered an insurance loss of approximately ₹16.50 lakh, but United India Insurance Company paid only ₹7,28,017 based on the surveyor's assessment. The complainant approached the Commission seeking payment of the differential amount along with compensation.

The insurance company, on the other hand, maintained that it had fully discharged its liability as assessed by the appointed Surveyor and that there was no deficiency in service.

The Surveyor had assessed the loss after making deductions towards under-insurance and policy excess. The Commission examined the assessment item-wise, including stocks, furniture/fixtures, plant and machinery, testing machine, compressor and generator.

The complainant argued that the incident was a total loss, and therefore under-insurance should not have been applied.

Observation and decision:

The Commission agreed that under-insurance would not apply in a genuine case of total loss, but examined whether the individual items actually constituted total or partial loss.

On examination, the Commission found that the Surveyor had wrongly applied under-insurance to Furniture, Fixtures & Fittings (FFF) and the Testing Machine. However, it upheld the surveyor's assessment concerning the stock, power steering machine and generator, finding no sufficient basis to interfere with those calculations.

After recalculating the claim, the Commission found that the complainant had been short-paid by ₹79,450. Considering the short payment, delay in settlement, mental agony and litigation expenses, it held that a lump-sum ₹1.25 lakh would meet the ends of justice.

Accordingly, the complaint was partly allowed, and United India Insurance Company was directed to pay ₹1.25 lakh within 30 days, failing which the amount would carry 6% annual interest from July 30, 2026 until payment.

Case No.:C.C. 481 OF 2015

Case Title: M/S LALA ENTERPRISES V/S UNITED INDIA INSURANCE COMPANY LTD.

Appearances:

Adv. N.A. SHALLA, Counsel for the complainant.

Adv. SHABIR KANTH, Counsel for O.P.

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